Month: January 2013

Home building permits near 4-1/2 year high

WASHINGTON – U.S. permits for future home construction set their fastest pace in nearly 4-1/2 years in November, pointing to underlying strength in the housing market, even as starts dropped after three straight months of strong gains.

Joe Raedle / Getty Images

Electrician Calvin Warren helps build a Toll Brothers Inc. home in the Azura community on November 20, 2012 in Boca Raton, Florida.

The Commerce Department said on Wednesday building permits increased 3.6 percent to a seasonally adjusted annual rate of 899,000 units, the highest since July 2008.

Economists polled by Reuters had expected permits, which lead starts by at least a month to rise to an 875,000-unit pace last month from 868,000 units in October.

Groundbreaking fell 3.0 percent to an 861,000-unit pace, worse than economists’ expectations for a pullback to 873,000 units. October’s starts were revised down to show an 888,000-unit pace instead of the previously reported 894,000 units.

The step back in homebuilding in November followed three straight months of solid gains, and reflected a 5.2 percent drop in the Northeast, which was slammed by Superstorm Sandy in late October. Starts also tumbled 19.2 percent in the West.

The housing market has regained some footing after a historic collapse that pushed the economy into its worst recession since the Great Depression.

That firming trend was reinforced by a report on Tuesday showing builders’ confidence in the market for new single family homes rose this month to its highest level in more than 6-1/2 years.

Homebuilding is expected to add to gross domestic product growth this year for the first time since 2005.

Last month, groundbreaking for single-family homes, the largest segment of the market, fell 4.1 percent to a 565,000-unit pace. Starts for multi-family homes slipped 1.0 percent to a 296,00-unit rate.

Selecting a Home Generator

It may have seemed like overkill in the past, but recent storms have forced many to reconsider the wisdom of owning a generator. Brief, infrequent electricity outages are easy enough to endure, but if you’re losing power more frequently and for longer periods of time, it may be time to purchase a portable or standby generator.

Portable generators: Labor-intensive but affordable

Smaller portable generators cost between $500 and $1,500 and are capable of powering your home’s essential appliances. But while this type of generator is relatively inexpensive and quick to set up, it does require manual operation and close monitoring.

First things first: You must be at home when the grid power goes out in order to get a portable generator going. And because a gas tank will hold three to six gallons on average, you must periodically refill it, even during foul weather.

Due to the risk of carbon monoxide poisoning from engine exhaust, a portable must be placed at least 10 feet away from the house. And I recommend plugging in a carbon monoxide detector whenever you run the generator as an extra precaution.

Standby generators: Hands-off but expensive

More powerful, quieter and safer than their portable counterparts, standby generators start automatically in a blackout — you don’t need to lift a finger. But that convenience doesn’t come cheap. Installed, an average system of this type will cost about $10,000.

The upside is that standby generators tend to last a long time, approximately 15 years. And upon home resale, they recoup 50 percent or so of their value. Though maintenance is necessary every two years, licensed professionals can help ensure a unit’s reliability.

Whether it’s worth it to shell out for a standby generator depends largely on your needs. Grid failures are certainly inconvenient for everyone, but for some people, living without power can be dangerous —families with home medical equipment come to mind.

In making your decision, strike a balance between what is essential for your comfort and what your budget will allow.

10 Most-Viewed Homes on Zillow in 2012

‘Tis the season for end of the year lists: best books, best movies, best newsmakers. But it wouldn’t be the end of 2012 without another significant list: the most-viewed homes on Zillow. From luxury mansions in Miami and Beverly Hills to a home once owned by the Osbournes, here are the properties that garnered the most clicks, starting with No. 10.

10. Mary Kay’s Pink Home

The former home of the founder of Mary Kay Cosmetics is exactly the color you would expect: a soft shade of light pink. Mary Kay Ash’s mansion was designed in 1984 and served as the businesswoman’s home and headquarters in Dallas. She sold the home in 2000 in her efforts to downsize. Watch the video tour.

9. Sunset Boulevard Mansion

The home may have garnered views for its spectacular size — 28,000 square feet — and its previous $29.9 million price tag, but even more interesting is the history of the home’s location. The house sits on a lot that once held a home owned by Sheikh Mohammed al-Fassi, an in-law of the Saudi Arabian royal family. He painted his house bright green and decorated the grounds with statues painted in flesh colors. In 1980 the home burned down, and the property was split into two lots, one of which was recently for sale as an unfinished mansion.

8. Million Dollar Room in Atlanta

A spot on television can get a home quite a bit of fame. This Atlanta house was recently featured on HGTV’s “Million Dollar Rooms” for its pool courtyard. Designed to be an outdoor retreat, the pool area features beautiful marble mosaics, fountains and spas as well as a full outdoor kitchen and dining area. The rest of the house isn’t too shabby, either. Measuring a whopping 40,000 square feet, the property includes seven full kitchens, two gyms, hair and nail salon, wellness center, cigar room and theater.

7. Christina Aguliera’s Home

It could be that “The Voice” host and singer Christina Aguilera owns this home. It could also be that the Osbournes once owned the Beverly Hills estate. Or, it could be the quite eclectic decor that reels people in. Whatever the reason, the Mediterranean-style manse garnered enough visits to put it at No. 7 on the list. The home is currently for sale — listed for $13.5 million since March 2011.

6. Encino Cliff Home

No. 6 on the most-viewed list is the kind of home most people dream of living in. Perched on a 5-acre, cliffside lot in Encino, the house is filled with luxury touches. The home begins with an enormous grand entry with black crystal chandelier and includes a gourmet kitchen with high-end appliances, enormous living room with a 20-foot wall of windows and a master suite with steam shower, dry sauna and whirlpool bath.

5. Woolworth Apartment

What makes this townhouse worth $90 million? Location: The home is located on New York‘s prestigious Upper East Side and measures 19,950 square feet. Built for Frank Woolworth in 1915, the neo-French Renaissance mansion is 35 feet wide, with 14-foot-high ceilings, grand fireplaces and formal parlor and breakfast room.

4. Over-the-Top in Beverly Hills

Just steps from the Beverly Hills Hotel is “The Crescent Palace,” which features a swan pond, and indoor and outdoor pool on over an acre lot. The 7-bedroom, 11-bath home also features a Moroccan dining room, media screening room, grand ballroom, 5,000-bottle wine cellar, gym and elevator.

3. Versace’s Florida Home

Swim in luxury in this home’s 24-karat gold-lined pool. Purchased by fashion powerhouse Gianni Versace in the 1990s, this Miami Beach home has 10 bedrooms and 11 bathrooms in a 23,462-square-foot floor plan. Most of the interiors are just as luxe as the gold pool outside, featuring tile mosaics, hand-painted walls and ceilings frescoes.

2. Florida Private Island

Located off the Atlantic shore of Marathon in the Florida Keys is a private island getaway with all the amenities. Surrounded by its own coral reef, the island measures 1.5 acres and contains a Bahamian-style 4-bedroom, 3-bath home.

1. Dick Clark’s Yabba Dabba Digs

You may expect the host of “American Bandstand” to live in a classic home — perhaps a California mid-century modern. Rather, the late Dick Clark’s home is more “Flintstones” than Americana. Perched on more than 22 acres in Malibu, the 2-bedroom cavern structure was last listed for $3.5 million.

Beware of these deal killers

Navigating clauses and conditions in real estate contracts

The typical real estate sales contract includes a number of clauses that can scuttle the deal. (Bon Bon/ Imagezoo / December 21, 2012)

The typical real estate sales contract includes not just a price and a closing date but also a number of clauses, any of which can trip up the buyer or seller and scuttle the deal.

While contract language may vary from one place to another — not just state to state but also county to county, and sometimes even from one company to another — here’s a quick rundown of some clauses or conditions that are likely to cause the most trouble:

Financing. Perhaps the most common contract condition makes the transaction contingent on the buyer obtaining a mortgage or a written commitment in the amount required to complete the purchase within a certain time frame.

Each part of this clause is important, obviously. But according to real estate professionals, the timing aspect can be the most troublesome. The sooner the buyer can complete this condition, the better. If the deadline passes without a loan approval, the seller has the right to cancel the contract.

“Since financing contingencies can be complex and vary widely, they require strict attention to all timelines involved,” advises Sam DeBord of Coldwell Banker Danforth in Seattle.

But buyers beware of using this clause to get out of the deal. You could find yourself in default if you fail to follow through on what you agreed to.

In Virginia, making a substantive change — seeking a loan that far exceeds the amount specified in the contract, for example, or being unable to find a rate that’s lower than what’s stated in the contract — may put your earnest money deposit in danger. In Minnesota, if your financing falls through after you have satisfied the financing contingency, the seller can keep all the earnest money as damages.

On the other hand, Florida contracts are “very one-sided” in favor of buyers, reports Liane Jamason of Smith & Associates in Tampa. Twice recently, Jamason had to deal with upset sellers who mistakenly thought they were entitled to their buyers’ deposits when their financing fell apart after months of waiting to close.

Closing costs. A poorly worded clause here can cost the buyer or seller a lot of money, depending on how it’s written.

Often, the agent writes in the contract that the seller will pay X amount toward the buyer’s closing costs at settlement, when what the buyer really wants is that X amount be paid toward closing costs, points, prepaid items, lender-allowed costs, warranties, administrative costs and fees.

“Closing costs are really only those associated with closing the transaction and may be far less than the entire list of financing charges,” explains Jim Mellen of Re/Max Peninsula in Williamsburg, Va. “A buyer who shows up at the table planning to have $6,000 paid on his behalf will be awfully angry if he gets only $1,200 of his fees paid.”

Another possible issue is how the closing cost contribution is stipulated. If it is given as a portion of the selling price, say $300,000, a 3 percent contribution could cost the seller $9,000. But if it is written as a part of the financed amount, say $240,000, the seller would be on the hook for just $7,200.

Make a mistake, and there are no do-overs. “The written word on a contract will trump intentions all day long,” Mellen says.

Disclosures. The different property disclosure clauses are “some of the more difficult to navigate,” says Ralph Harbison of Re/Max Realty Brokers in Birmingham, Ala. Buyers tend to want “yes” or “no” disclosures, but sellers prefer something that says they are not aware of any issues. And that leaves buyers to wonder what’s wrong with the place.

Writing certain inspection clauses — termite, radon, mold, lead-based paint, home — into the contract should go a long way toward removing the buyer’s anxiety, but only if the buyer adheres to the contract’s timelines.

In Florida, for example, the buyer typically has 10 days in which to obtain and review a home inspection. The buyer can cancel the contract during this period by providing a written notice to the seller, or he can ask for an extension. But issues arise when the buyer tries to negotiate repair credits or actual repairs and the inspection period expires.

“If the repair issues cannot be resolved during the initial inspection period, the buyer must execute the cancellation or extension,” says Blair Damson of Coldwell Banker in Coral Springs, Fla.

In the Philadelphia area, as long as the buyer adheres to the time limit, he only has to notify the seller that he does not wish to proceed to get back his earnest money deposit. But Linda Williams, an attorney/agent with Sage Realty in Wayne, Pa., goes a step further by making sure the deposit is not payable to the seller until after the inspection period ends.

Dates. One more thing about timelines: Be explicit. Contract language should be spelled out in either calendar days or banking days, says Magda Robles of Keller Williams Properties in Weston, Fla. “Number of days is not good enough,” she says. “Specify the specific month, day and year.

“As is.” This clause can be a double-edged sword, says David Welch, a broker in Orlando, Fla. While the seller is not obligated to make any repairs found necessary during an independent home inspection under the as-is clause, the buyer can cancel for any reason if he does not like what the exam has revealed.

Short sales. Buyers need to be leery when a “seller” in a short sale commits to paying closing costs. The bank is the seller, not the occupant, warns Christy Walker of Re/Max Signature in Phoenix. As such, the bank has every right to renegotiate the fees or refuse to pay them at all.

Tips for Preparing to Buy in 2013

You’ve been saving your pennies for a down payment and watching the housing market news. You see the low interest rates, are confident you’ll own a property for at least five years and know that you’ll be able to find a home that you’ll love within your budget.

You’re finally ready to buy a home in 2013!

Here are a few tips to help you get started.

Get with a lender

First up is going to a bank, direct lender, credit union or mortgage broker to get qualified for a loan. They will run the numbers to set your price range for financing. This will help you in working with a real estate sales professional to determine which areas and types of properties fit within your budget. The lender will also pull a credit report to see if you need to be aware of any credit issues. If necessary, this will give you time to start improving your credit picture to make you the most creditworthy you can be when it comes time to lock your loan rate and terms.

Find a competent real estate agent

You also should look for a real estate agent whom you feel can best represent you. Talk to friends and acquaintances for referrals, and interview at least three agents. Find out how many properties they’ve sold in the past few years, what training they have and whether they work as an agent full time and know the areas where you would like to purchase. Get some references from each one and actually take the time to call those references and see what they thought of the real estate professional’s service level and experience.

Educate, educate, educate

This will most likely be your most complicated, expensive and riskiest purchase of your life. You should talk to friends, family members and possibly a lawyer; read books, articles or take a class. In other words, do everything you can to better understand the real estate buying process and how to make the best home purchase decision.

Shop, shop, shop

Consider all the neighborhoods that fit in your price range. Drive them during the day, at night and on the weekend to get a feel for the areas. Look at the neighbors’ properties, any retail spaces nearby and check online neighborhood ratings, crime reports and school ratings. Learn all you can about where you are going to be a real estate owner.

With a price range from your lender, a good real estate sales professional on your side and a solid education on buying a home and the areas where you want to buy, you’re now better prepared to make 2013 the year of the home purchase.

7 Tips for Keeping Your Financial Fitness Resolution

[1]The new year is a great time to get yourself pointed in the right direction financially. “Making small improvements at the beginning of the year is a lot easier than trying to play catch-up,” says financial planner Rick Rodgers, author of “The New Three-Legged Stool: A Tax Efficient Approach To Retirement Planning.”

“Just as you would embark on an exercise program to lose weight and get physically fit, there are simple steps you can take that will lead to being financially healthy and fit.” Here are Rodgers’ seven tips for improving your financial life in 2013.

• Review your credit report—Borrowing money isn’t the only reason to check your credit. Employers check credit reports and so do insurance companies. Your credit score can have a profound effect on the amount you pay for auto and homeowners insurance—and perhaps on health and life insurance in the not-too-distant future. Order your free credit report at AnnualCreditReport.com.

• Set up an Automatic Savings Plan (ASP)—If your employer doesn’t offer this through payroll deduction you can set one up through your bank or brokerage account. Simply have a certain amount of money withdrawn from your checking or savings account each month and deposited into your investment account. That way, you save it before you ever have a chance to spend it. Try to increase the amount you invest at least once a year.

• Establish a cash flow plan—Business owners know you can’t control what you don’t track. Take the time to forecast your income and expenses for the year, and put it in writing. Then adjust those numbers to reach your goals, such as paying down debt or replacing a car. Track your progress on a regular basis by holding a monthly family finance meeting to review the plan.

• Pay off your credit cards—It’s especially important to take action on debt in 2013. Cash doesn’t earn much interest sitting in a deposit account (less than 1 percent) and even “low interest” credit cards charge 10 to 12 percent. So if you’re sitting on any extra savings, consider using it to pay down credit card debt. Your cash flow plan should include a schedule to eliminate credit card debt as quickly as possible.

• Shop your insurance—Insurance agents are often paid commission based on premium levels, so they have no incentive for finding existing customers lower premiums. However, there is a huge incentive for a competing agent to find you the lowest premium in order to win your business. Make note of the coverage levels you have for your homeowner’s and auto policies and use them to comparison shop. Look at ways to save on your health insurance coverage, too, such as switching to a high-deductible plan and opening a Health Savings Account.

• Write an estate plan—At a minimum you need to have a valid will, power-of-attorney (POA) for your finances and health-care decisions, and a living will (Advanced Healthcare Directive in some states). Decide who will be your personal representative in the event you become incapacitated (POA) or at your death (executor). If you have minor children, choose who will raise them in your absence and establish a testamentary trust for their finances.

• Meet with a financial adviser—An adviser is to financial planning as a personal trainer is to an exercise program. Allow yourself to be held accountable by a third party who will push you to help yourself. Good advisers will help you develop a budget, look at your debts, tax situation, retirement and college savings, estate planning and insurance. You don’t have to be a high-net-worth individual to seek the assistance of a financial adviser. Go to the National Association of Personal Financial Advisors (NAPFA) and search for one in your area.

Don’t just make a vague resolution to save money. According to Psychology Today, of the millions of American’s who make a New Years resolution, 40 percent have already failed by Jan. 31. Let 2013 be the year you make lasting changes to improve your financial life.

5 year-end real estate tax breaks worth considering

Mood of the Market

At this time of year, most people have some sort of rush situation happening in their lives. Maybe it’s a rush at work to get those annual targets met before you leave for the holidays, or a rush at home to prep for the holidays themselves.

But if you are — or were — a homeowner, there’s a short list of other items you should consider placing on your “rush” list to get done before year’s end that have nothing to do with twinkle lights, animatronic Santas or gluten-laden baked goods.

1. Prepay interest. If you have the cash handy, consider paying your January mortgage payment before December even ends. The interest portion of this payment is actually interest that accrued to your mortgage in 2012. So, if you pay it before the end of the year, it will increase the mortgage interest deduction you’ll be able to take as soon as you file your 2012 taxes (after Jan. 1).

And no, Virginia, you can’t just prepay all of next year’s payments to boost your tax deductions — the January payment applies to December 2012’s interest in arrears. If you prepay for other months in 2013, the IRS requires that you claim that interest on your 2013 taxes.

2. Close on your refi — especially if you’re paying points. If you’re a buyer, it’s almost undoubtedly too late to start and close an escrow this year. But if you’re a homeowner in the process — or even considering — refinancing your home, there might still be time to put the pedal to the medal and close the deal.

Discount points or other prepaid mortgage interest you shell out to close a refinance home loan may be considered fully tax deductible on your 2012 return to the extent that the refinance money covers your original purchase money loan and home improvements. (If you get extra cash out from your refi, your points may still be deductible, but you’ll have to take the deduction over the life of the loan.) So, if you get them paid before the end of this year, you stand to improve your tax situation only when you file next year.

3. Get your property taxes paid. Most taxpayers should be able to qualify to deduct next year’s property taxes, so long as they get them paid by Dec. 31. Two primary criteria apply here:

You must be what the IRS considers a cash-basis taxpayer (meaning you report income the year you receive it and deductions the year you pay them, on the whole), and

Your county or other taxing authority must accept prepaid taxes as prepaid taxes — not as a deposit. Check with your tax assessor’s office to see how they handle prepaid property taxes before you make this move with the expectation of getting a big tax deduction boost.

4. Get warm — and tax credits — at the same time. Many cities and states offer meaty tax credits for homeowners who make energy-efficient home improvements, like dual-paned windows, solar systems and tankless water heaters, to name a few. Check your city and state websites for which improvements qualify in your area, then get on the horn, as these can be challenging improvements to schedule when the weather is bad, and the clock’s a-ticking!

5. Settle out a lingering HELOC. If you lost a home to foreclosure and have an old second loan or home equity line of credit (HELOC) still lingering on your credit reports, now might be a great time to approach that lender or servicer and negotiate a settlement. Even if it has been charged off or the servicer is not aggressively pursuing you for it, these old loans — often called sold out junior liens — remain on your credit reports and make it nearly impossible to qualify for a new home mortgage.

Banks like to close their books out at the end of the year, and are generally more willing to settle at lower amounts with people who no longer own the property. Further, the Mortgage Forgiveness Debt Relief Act is, surprisingly, still set to expire on Dec. 31. That means there’s at least a chance that Dec. 31 might be your last chance to settle that lingering second loan or HELOC for less than the full amount without having to pay any income taxes on the forgiven debt.